The Pentagon may be too busy to fix its half-century-old budget process, reform group says

A congressionally directed panel working on recommendations to give the Pentagon new spending flexibility released an interim report Tuesday—but acknowledged the Defense Department may not have the bandwidth to implement their suggestions. 

The panel’s job is to modernize the Pentagon’s over half-a-century-old budget process, called the Planning, Programming, Budgeting & Execution Process, or PPBE, so the military can get newer technology much faster than it can today.

The commission’s interim report details “potential recommendations” and other actions that could be implemented immediately to speed up the Defense Department’s budget process. The commission will release its final report in March 2024. 

The group wants to change processes to foster innovation and better adapt to changing requirements, Bob Hale, chair of the Commission on PPBE Reform and previous Pentagon comptroller during the Obama administration, said Tuesday at a Defense Writers Group event.

But despite the need for change, Hale said he’s worried the Pentagon doesn’t have the “bandwidth” to implement the commission’s potential proposals. 

“They are so busy with the day-to-day issues of oversight and then the financial crises that seem to be unending, [and] Ukraine right now, which takes up a lot of time,” Hale said. “I am concerned about their ability to absorb these changes.”

While he doesn’t expect to see any changes in legislation this year, Hale said he has seen a willingness to change throughout the department.

Part of the challenge is a “dynamic tension” between Congress’s need for oversight and the Pentagon’s need to move quickly with the right force structure, said Ellen Lord, vice-chair of the commission and a former industry CEO who was the Pentagon’s top weapons buyer during the Trump administration.

Russia’s invasion of Ukraine and China’s persistent presence in the Pacific has spurred a demand for change, Lord said. 

“Our challenge, I believe, boils down to coming up with systems where we have the data and information provided consistently on a timely basis to allow both the DOD to generate the most meaningful resourcing decisions, and then allow the Hill to understand what those are and how they were derived, and then be able to adjust very quickly because we are in an era where everything is dynamic,” Lord said. 

The interim report details potential recommendations that could “introduce substantial disruption to the financial structure” of the Defense Department, the report said.

The commission isn’t advocating throwing everything out, “as appealing as that might sound to people,” Lord said. “What we’re trying to do is take what works and streamline it, so that we have a relevant timeframe.”

One example of how the department could transform the budget process is by consolidating the number of line items in the annual budget.

In the research, development, test, and evaluation account alone, “there are about 1,000 of these little guys and you’ve got to wonder whether that is so many that it’s difficult for DOD to manage, let alone perhaps for Congress to execute oversight,” Hale said. 

The panel also is looking at the department’s use of “colors of money”—aka the Pentagon’s method of putting money into different pots in its budget, such as procurement, operations and maintenance, and RDT&E.

If the Defense Department’s money wasn’t so segmented, an acquisition organization could pay for its expenses using procurement, even if some of it would normally have been research or operating money, Hale said. 

“That would make it less common that programs are slowed, because the program manager hasn’t been able to foresee exactly how much money they needed in a procurement pot versus the research pot. This would have to be accompanied, I think, by a set of rules that provided for congressional oversight, or it’s not going to be acceptable,” he said. 

The commission also might recommend restructuring the budget so the dollars are expressed in a “more mission-oriented fashion,” Hale said. “The goal is to be more mission-oriented and make it easier to relate strategy to budget.”

One action the Pentagon could implement now is conducting a midyear budget review to improve communication with Capitol Hill, Hale said.

Congressional staff members told the panel they receive an avalanche of information when the budget is first submitted, but for the rest of the year, information is sporadic and sometimes inconsistent, Hale said. 

“If we could get this dialogue going, I think it would help improve relationships between DOD and Congress on PPBE-related issues and hopefully limit the amount of changes that have to be made,” he said. 

Meanwhile, some GOP lawmakers in the House Armed Service Committee want to abolish a key part of the Pentagon’s budget process, called the Office of Cost Assessment and Program Evaluation, or CAPE, which analyzes what type of major acquisition programs the military needs and what they are likely to cost.

Hale said the commission isn’t going to “take a stand” on the future of CAPE, but the functions the office provides are essential to making PPBE work, as it leads the programming process and supplies information throughout most of the process.

“If they just abolish CAPE and don’t provide those functions, it would be a disaster. The process couldn’t work without it,” Hale said.

Defense One